Donations made to a foreign trust or any political party do not qualify for this deduction, however, contributions towards the PM CARES Fund are 100 per cent exempt under Section 80(G).
Even though charitable donations get tax benefits, there are terms and conditions attached to them.
At some point in our lives, we donate for a cause or provide financial support towards a charitable service. For these contributions, the government gives certain tax benefits under Section 80G of the Income Tax Act.
Both individual and non-individual taxpayers, who make an eligible donation, can avail of tax benefits, depending on the limits and conditions of the Income Tax Act. However, note that this can be availed by them opting for the old tax regime.
Even though charitable donations get tax benefits, there are terms and conditions attached to them. For instance, the mode of donation must be in monetary terms. Further, donations up to Rs 2,000 can be made in cash – any amount above that needs to be made through bank transfer, cheque, draft, etc. From FY 2017-18 onwards, donations made in cash exceeding Rs 2,000 were not allowed as a deduction. Contributions made in kind such as food, clothes, medicines, etc. do not qualify for deduction U/S 80G.
Amount of donation
Under Section 80G, a deduction of 50 per cent or 100 per cent of the amount contributed can be availed as a deduction. Note that, depending on the gross total income of a taxpayer, donations made to certain organisations could also be restricted to an upper threshold for claiming tax deductions. For instance, while donation for repairs or renovation to any notified temple or mosque or gurudwara or church or a religious place is eligible for 50 per cent deduction subject to 10 per cent of the gross total income of the taxpayer, a donation to funds such as National Sports Fund, National Cultural Fund, Fund for Technology Development and Application, National Children’s Fund, National Defence Fund set up by the Central Government, Prime Minister’s National Relief Fund (PMNRF) etc. is eligible for 100 per cent deduction without any limit.
However, donations made to a foreign trust or any political party do not qualify for this deduction. Additionally, contributions towards the PM CARES Fund are 100 per cent exempt under Section 80(G).
Experts say taxpayers should always keep a receipt of their donations. For instance, the institution where the donation is being made should issue a receipt to the donor which will act as a documentary proof for claiming the deduction. The receipt issued should be proper and have details like the name, address and PAN of the doner, along with the donation amount.